An innovative refinancing of a mature Chilean toll road concession earns Grupo Costanera the award for Local Currency Deal of the Year, setting a new benchmark for scale, execution and structural sophistication in the domestic capital markets.
The transaction centers on the refinancing of Costanera’s Vespucio Sur urban highway concession, part of Santiago’s ring road system. Executed in October 2024, the bond issuance reached a size rarely seen in Chile’s local market, particularly for an infrastructure asset with revenues denominated entirely in inflation-linked pesos. Issued in two series, the deal totaled 14 million UFs — equivalent to approximately $580.3 million — making it the largest single-day corporate bond placement ever completed in Chile.
The UF, a unit of account indexed daily to inflation, remains the preferred currency for long-dated domestic infrastructure financings. But the scale and structure of the Costanera transaction push the format further than previous local issuances, reflecting both the maturity of the asset and the increasing sophistication of Chile’s institutional investor base.
“The deal achieved the participation of a transversal range of institutional investors, attesting to the solidity of the asset and the market’s confidence in our financial strategy and in Chile’s road concessions system,” says Diego Savino, general manager of Grupo Costanera, which fully owns the Vespucio Sur concession.
Beyond size, the transaction stands out for its liability-management component. The refinancing included a tender offer aimed at removing the monoline guarantee embedded in the original bond structure. That process simplified the capital structure, enhanced flexibility and aligned the concession more closely with current market standards, while maintaining strong investor protections. The successful execution of the tender offer underscored both investor confidence in the credit and the issuer’s disciplined approach to balance-sheet management.
Structurally, the bond also breaks new ground. It is the first corporate issuance to incorporate Chile’s tariff adjustment compensation account — a mechanism introduced by the government to address mismatches between concession revenues and regulated tariff regimes in urban highways. The account provides compensation linked to adjustments in concession fees, but its inclusion required careful structuring to ensure predictability of cash flows and appropriate risk allocation.
To accommodate this feature, the bond documentation includes tailored amortization schedules that extend into the concession’s extension period, as well as specific safeguards designed to protect bondholders in the event of early disbursements from the compensation account. The result is a structure closely aligned with the contractual and regulatory reality of the asset, while preserving transparency and simplicity for investors.
The issuance was split evenly between two series of 7,000 UFs each. Series B carries a seven-year tenor and a coupon of 3.9%, while Series C extends to eleven years with a coupon of 4.1%. The staggered maturities were designed to appeal to investors with differing duration requirements, broadening demand and enhancing distribution.
Savino explains that the refinancing responds to structural challenges introduced by changes to Chile’s road-concession remuneration framework over recent years. Under the revised regime, Vespucio Sur will operate with a fixed tariff until December 2032, after which it transitions to a variable-fee structure. The bond’s amortization profile mirrors this evolution, ensuring debt service remains compatible with projected cash flows throughout the life of the concession.
Costanera evaluated several financing alternatives before opting for a domestic bond refinancing. Bank loans and offshore capital markets were considered, but ultimately ruled out.
“Local debt aligns more closely with the concession’s revenue stream,” Savino says, pointing to the natural hedge provided by UF-denominated liabilities against inflation-linked toll revenues.
Execution was supported by an extensive domestic roadshow, resulting in participation from more than fifty institutional investors and nearly full coverage of Chile’s local capital-markets universe. Demand proved robust, with both series close to two times oversubscribed, reinforcing confidence in the credit and validating the structural innovation embedded in the deal.
“This experience shows that the Chilean market benefits from enough depth to absorb large corporate issuances when structures are well aligned with the contractual reality of the projects,” Savino remarks.
The success of the Vespucio Sur refinancing has already had a demonstrable follow-on effect. In 2025, Costanera replicated the structure in the refinancing of another urban highway asset, Costanera Norte, raising a further 20 million UFs across two placements.
Together, the transactions underscore how Chile’s local currency market can deliver scale, innovation and execution certainty for complex infrastructure assets — and why Costanera’s refinancing stands out as the Local Currency Deal of the Year.
Vespucio Sur ($580m) UF14m Bond Issuance
Financial Advisors: Itau; Santander
Legal Counsel: Arteaga Gorziglia